Dáil Éireann Debate, Tuesday - 12 October 2021
105. Deputy Ged Nash asked the Minister for Finance the discussions he or his officials have had with a bank (details supplied) in relation to lifting the pay cap in view of comments by its CEO; and if the pay cap will not be lifted until at least a time that SEARS legislation is enacted. [49146/21]
Amharc ar fhreagra106. Deputy Ged Nash asked the Minister for Finance the discussion he has had with an organisation (details supplied) on the lifting of the pay cap; and if he will make a statement on the matter. [49147/21]
Amharc ar fhreagra108. Deputy Ged Nash asked the Minister for Finance his views on recent comments by a person (details supplied) that the lifting of the pay cap is vital to the long-term sustainability of the indigenous banking sector. [49149/21]
Amharc ar fhreagraI propose to take Questions Nos. 105, 106 and 108 together.
Statements made by the Bank of Ireland CEO, or any other official of the bank, in relation to challenges facing the banking sector is a matter entirely for those individuals. This includes remuneration restrictions. The same applies to statements made by officials of other banks and of the banking sector representative body, the BPFI.
In the past, I have answered a parliamentary question for the Deputy in relation to remuneration restrictions at the banks. The position has not changed in the meantime and for the benefit of the Deputy, I am providing my previous response as follows:
Government policy on banking remuneration has remained unchanged since the financial crisis. Extensive restrictions are in place and these are not simply confined to a small number of senior bankers whose pay is restricted by the €500,000 pay cap. These affect circa 23,000 workers across the three banks in which the State has a shareholding. The policy dictates that variable pay including bonuses and any other fringe benefits including the likes of health insurance and childcare cannot be paid to any staff members from the most junior lowest paid staff to the most senior ranks.
As a result the previous Government undertook to carry out a review of Government bank remuneration policy to determine if it remained fit for purpose. My department worked with the specialist advisory division of Korn Ferry to undertake this review. Stakeholders engaged with included the major institutional investors in the banks, proxy advisory firms, the Financial Services Union (FSU), the chairs of the remuneration committee in each of the banks, the Central Bank of Ireland and representatives of the Single Supervisory Mechanism (SSM) in Frankfurt.
As I have indicated previously I have read the report. It is a complex and far ranging piece of work and it has most certainly informed my thinking on the issue.
I acknowledge that there is a very different European regulatory environment in place now which will help prevent the return to some of the excesses of the boom years including the EU Capital Requirements Directive (CRD IV) and the Remuneration Guidelines of the European Banking Authority.
Furthermore the powers of the Central Bank were significantly enhanced by the Central Bank (Supervision and Enforcement) Act 2013, particularly powers to take action against wrongdoing by financial services providers and to strengthen the ability of the Central Bank to take action against individuals.
However I believe the issue of bank remuneration is inextricably linked to further restoring public confidence in the culture and accountability of our banks and the forthcoming SEAR regime and the Central Bank (Amendment) Bill more generally, will provide an effective framework and will help to reassure the public that meaningful cultural change is underway in the banking sector.
